The Greek parliament has voted overwhelmingly to pass austerity measures demanded by global creditors, paving the way for a multi-billion pound rescue of the country from financial ruin.
Though the broad outlines of the Greek bailout were agreed Monday by the eurozone’s 19 leaders, the ESM’s decision formally kick-starts the process by which Greece negotiates the nitty-gritty of its bailout program. “Nothing was certain and nothing is”, he said as the debate kicked off. “It’s not going to be easy”.
“I don’t know if we did the right thing”.
Dissenters argued that Greeks could not face any further cuts after six years of recession that saw poverty and unemployment skyrocket and wiped out a quarter of the country’s economy.
But there were still unanswered questions, including when capital controls and other limits on the banking system would end and whether the Greek government could implement reforms in the labor market and other areas necessary for a third bailout.
The first big development Friday was the news that German lawmakers, in the wake of their Austrian counterparts, voted 439-119 in favour of opening detailed discussions on the bailout package.
Chancellor Angela Merkel has urged MPs to back the deal, saying she was “absolutely convinced” it was the way forward.
The European Central Bank has increased its emergency lending to Greece, President Mario Draghi revealed Thursday, raising hopes that banks may be able to open their doors after more than two weeks of closures.
The loan will be disbursed in two installments and will have to be repaid in three months, after Greece starts receiving the €82 billion to €86 billion bailout for which negotiations will start soon.
He was angered after the European Commission asked all members, including those outside the eurozone, to contribute towards a £5billion loan.
Merkel told a special session of Parliament that lawmakers faced “a decision for a strong Europe and a strong eurozone”. “The alternative to this agreement would not be a ‘time-out’from the euro… but rather predictable chaos”, she told the Bundestag.
With Germany on board, fresh talks will begin in earnest on a new deal between Greece and its creditors.
The minister said Thursday “it would perhaps be a better way for Greece, and many say that – increasingly in Greece too”. “We would be grossly negligent, and acting irresponsibly, if we didn’t at least attempt this way”.
Bailing out Greece isn’t popular among Merkel’s conservatives and the chancellor acknowledged concerns over the chances of a successful bailout.
European equities also traded sharply higher after Prime Minister Alexis Tsipras’ reform plan was pushed through.
Energy Minister Panagiotis Lafazanis and Deputy Labour Minister Dimitris Stratoulis also voted against the package, prompting speculation they could lose their jobs in a reshuffle. Valavani had announced her resignation immediately before the vote.
As a result, expectations have risen that Greece will secure a three-year financial bailout which will allow it to get back towards some sort of economic normality following weeks of crisis which have seen banks shuttered and withdrawals at ATMs limited to €60 a day.
On July 22, Greece’s parliament will have to approve another round of reforms.